Nominal Interest Rates in India Are 7%, While Nominal Interest

question 32

Multiple Choice

Nominal interest rates in India are 7%, while nominal interest rates in the UK are 5%. The spot rate for the Indian rupee (INR) is £0.120. According to the international Fisher effect (IFE) , the rupee should adjust to a new level (to the nearest £0.001) of:

• A) £0.015.
• B) £0.118.
• C) £0.119.
• D) £0.121.

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Definitions:

Profit-Volume Chart

A graphical representation that shows the relationship between a company's profits and its level of output or sales volume.

Total Sales

The sum of all revenues earned from selling goods or services within a specific period.

Total Costs

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.

Break-even Point

The level of sales at which total revenues equal total expenses, resulting in no net profit or loss.